LOS ANGELES—Small-box creative office is the new “it” office space for the millennial workforce. In these spaces, companies can create their own unique atmosphere and culture, and they are willing to pay a premium to do it. While these spaces are popular, they are also rare. Two stand-alone refurbishments are under construction in Silicon Beach—a 16,836-square-foot building at 1301 Colorado Boulevard and a 21,088-square-foot building at 901 Wilshire Boulevard—and are getting a ton of interest from potential tenants. Blake Mirkin and Daniel Rainer of CBRE are handling the leasing for the two spaces and can attest to the high popularity. To find out why these spaces are garnering so much attention and where the supply of stand-alone properties is headed, we sat down with Mirkin and Rainer for an exclusive interview.
GlobeSt.com: Why are standalone creative spaces so popular for tenants?
Blake Mirkin: Stand-alone, creative spaces offer a unique opportunity for a company to occupy an entire building and create a defined sense of place and culture for their employees. The millennial workforce places such a large emphasis on the workplace environment and leasing an entire building creates a unique and positive work atmosphere, which helps to attract and recruit talent. In addition, a stand-alone creative office can also communicate a company's identity really well to its employees as well as to the outside world.
GlobeSt.com: These are being called two of the last available standalone buildings in Silicon Beach. Why is there such a dearth of supply for this product type?
Daniel Rainer: It's supply versus demand. Since the explosion of Silicon Beach, this type of product has been highly sought after. For the reasons mentioned above and many others there is great upside to occupying your own building. Since this area has been on a seven to eight year run with lots of expansion of existing companies and new ones entering the market, most of the product is now occupied. Also, a lot of the single-tenant buildings are owner-user occupied, so those buildings don't often present an opportunity to be leased or acquired.
GlobeSt.com: Do tenants pay a premium for a standalone property? What is the difference in pricing between a similar floor plate in a larger building?
Rainer: There is definitely a premium and for many reasons. As mentioned above, there's much more demand than there is supply in the stand-alone creative office space, so those in the market will have to pay a premium. In the case of 1301 Colorado & 901 Wilshire, the central Santa Monica locations demand premium rates. You also can't really compare a 21,000 square-foot, three-story building with a roof deck in the heart of Santa Monica and a 16,000 square-foot single-story building with 18-foot ceilings to the generic high-rise building.
GlobeSt.com: What has the response been like for each of these properties?
Mirkin: It's been incredible. There is definite excitement within the market that these two options have presented themselves. We've had great traction in a very short period of time. We've fielded calls from a wide array of tenants. It's running the full gamut from top-tier entertainment groups to hospitals.
GlobeSt.com: Where are tenants headed to next if the supply is so tight? And developers? Are there already areas that are seeing creative office conversion like this?
Rainer: The much talked-about Arts District in Downtown seems like the logical answer since creative tenants have already begun the migration there, but I would also say West Adams and Inglewood due to new developments that have already set foot in there, and the success of the Metro line.
LOS ANGELES—Small-box creative office is the new “it” office space for the millennial workforce. In these spaces, companies can create their own unique atmosphere and culture, and they are willing to pay a premium to do it. While these spaces are popular, they are also rare. Two stand-alone refurbishments are under construction in Silicon Beach—a 16,836-square-foot building at 1301 Colorado Boulevard and a 21,088-square-foot building at 901 Wilshire Boulevard—and are getting a ton of interest from potential tenants. Blake Mirkin and Daniel Rainer of CBRE are handling the leasing for the two spaces and can attest to the high popularity. To find out why these spaces are garnering so much attention and where the supply of stand-alone properties is headed, we sat down with Mirkin and Rainer for an exclusive interview.
GlobeSt.com: Why are standalone creative spaces so popular for tenants?
Blake Mirkin: Stand-alone, creative spaces offer a unique opportunity for a company to occupy an entire building and create a defined sense of place and culture for their employees. The millennial workforce places such a large emphasis on the workplace environment and leasing an entire building creates a unique and positive work atmosphere, which helps to attract and recruit talent. In addition, a stand-alone creative office can also communicate a company's identity really well to its employees as well as to the outside world.
GlobeSt.com: These are being called two of the last available standalone buildings in Silicon Beach. Why is there such a dearth of supply for this product type?
Daniel Rainer: It's supply versus demand. Since the explosion of Silicon Beach, this type of product has been highly sought after. For the reasons mentioned above and many others there is great upside to occupying your own building. Since this area has been on a seven to eight year run with lots of expansion of existing companies and new ones entering the market, most of the product is now occupied. Also, a lot of the single-tenant buildings are owner-user occupied, so those buildings don't often present an opportunity to be leased or acquired.
GlobeSt.com: Do tenants pay a premium for a standalone property? What is the difference in pricing between a similar floor plate in a larger building?
Rainer: There is definitely a premium and for many reasons. As mentioned above, there's much more demand than there is supply in the stand-alone creative office space, so those in the market will have to pay a premium. In the case of 1301 Colorado & 901 Wilshire, the central Santa Monica locations demand premium rates. You also can't really compare a 21,000 square-foot, three-story building with a roof deck in the heart of Santa Monica and a 16,000 square-foot single-story building with 18-foot ceilings to the generic high-rise building.
GlobeSt.com: What has the response been like for each of these properties?
Mirkin: It's been incredible. There is definite excitement within the market that these two options have presented themselves. We've had great traction in a very short period of time. We've fielded calls from a wide array of tenants. It's running the full gamut from top-tier entertainment groups to hospitals.
GlobeSt.com: Where are tenants headed to next if the supply is so tight? And developers? Are there already areas that are seeing creative office conversion like this?
Rainer: The much talked-about Arts District in Downtown seems like the logical answer since creative tenants have already begun the migration there, but I would also say West Adams and Inglewood due to new developments that have already set foot in there, and the success of the Metro line.
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